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Wednesday, 27 May 2009
Page: 4459


Mr NEUMANN (10:46 AM) —I rise to speak in support of the Tax Laws Amendment (2009 Measures No. 2) Bill 2009. Nothing frustrates business more than the oddities, irregularities and eccentricities of the tax system. Dealing with and being involved in business every day is a frustrating thing from time to time. Getting those letters from the tax office and thinking about inappropriate and unintended consequences to actions you undertake with respect to rolling over assets or employing new staff is extremely frustrating for business in the circumstances.

We know, at this really difficult time, we have lost across the forward estimates $210 billion in tax revenue. One in every five dollars that the government gets now and is going to get into the future has been lost. We know a lot of that is caused by the global financial crisis and what we have seen. We know also that our unemployment rate is going to rise. That means that people are going to be out of work and they will not be paying tax. Businesses may fail, and the consequence of that will be a reduction not just in capital gains tax and fringe benefits tax but also in corporate tax. The consequence of that is that our revenue is going to suffer.

We know at this time that our businesses are going to do it tough, and some of them already are. We see the consequences of the global recession every day in our electorates. Family, friends and constituents are losing jobs. If we can support small business, that is a wonderful thing and it is necessary for the benefit of our economy and those whom we represent here in parliament. There are about 1.9 million small businesses in this country, employing over four million people. They are the heart and soul, the tissue and the lungs, and the backbone of our economy.

In small rural communities, in regional areas, in country towns in Queensland, small business is the lifeblood of employment. There are often no multinational companies but there are bakers, butchers, local real estate agents and used car dealers. There are millions of people in small business in rural and regional Queensland. In cities like Townsville and Ipswich, and Rockhampton and Mackay, small businesses flourish. It is not the headquarters of multinational corporations but small businesses that are there, present and operating each and every day, and they are going to do it tough.

This legislation contains a suite of changes to assist small business. Some of them relate to charity. Some of them relate to bushfire victims in this wonderful and terrifying country—we have seen that in Queensland with floods around Ipswich, Caboolture and Brisbane itself. We have seen it in northern New South Wales. We have seen it up north, in Far North Queensland; we have seen about 62 per cent of Queensland under flood. We live in a wonderful country but Mother Nature treats us quite harshly. In one of the schedules, there are changes to assist bushfire victims in Victoria. But there are also important measures in the tax laws amendment which will mean that inappropriate tax consequences will not be thrust upon business.

We have done many things to stimulate the economy and help small business. For example, one of the many things which many people in my electorate have talked about in terms of tax changes to help small business has been the 30 per cent small business tax break—now increased to 50 per cent in circumstances where small businesses acquire eligible assets costing more than $1,000 between 13 December 2008 and 31 December 2009 and they are installed, operational and ready to use by 31 December 2010. That is going to benefit many small businesses. The increase in the R&D tax credit is also going to help small business. One of the pieces of legislation we debated last night, the PAYG cash flow relief, will also help small business, with $720 million in relief poured into small businesses. That will help over a million small businesses to pay their quarterly PAYG instalments in a previous year, by adjusting the GDP adjustment factor from nine per cent to two per cent.

And of course the amendments we are talking about here by way of schedule will help small businesses as well. I will go through those in detail. Schedule 1 will make a difference because we acted in an early and decisive way, in response to the challenges we faced economically, with the Financial Claims Scheme last year. Under that scheme APRA can make payments to account holders in failed institutions and to claimants under general insurance policies which deal with failed insurance companies. That was about those in farming communities with farm management deposits, those with retirement savings accounts, those with first home saver accounts and those with a variety of other forms of accounts who would otherwise have lost out on being supported in the circumstances. It was about sustaining the economy, sustaining our constituents and sustaining the lifeblood of small and regional communities.

But it is important that we do not inadvertently trigger capital gains tax consequences for those schemes. It is important that, when we do this, we ensure that, for example in relation to farm management deposits, a transfer for tax purposes is not a withdrawal. It should not trigger a tax consequence. In relation to retirement savings accounts, it should be considered a rollover and not a withdrawal in the circumstances. The same thing applies to first home saver accounts. They should not be adversely affected, because it is real people, people in our electorates, who are involved in these types of deposit accounts—people who have done this thinking about their security for the future, thinking about the security of their farming businesses—who would suffer as a result.

The Financial Claims Scheme, as I said, was brought in in October 2008. It was brought forward to deal with the consequences of the global financial crisis. But we did not want to have it installed in such a way that it inadvertently hurt small business. So, in those circumstances, the amendments in relation to schedule 1 will make a big difference in the lives of small business in my community in Blair, where we have many small businesses, not just in Ipswich but also in those small rural communities like Kalbar, Boonah, Laidley, Gatton, Withcott and other places.

Under schedule 2 we see some changes that increase access to small business CGT concessions for taxpayers owning a CGT asset used in a business by an affiliate or entity connected with a taxpayer and for partners owning a CGT asset used in the business. That will make a big difference in the lives of many people. The amendments here increase concessions for taxpayers owning a capital gains tax asset used in a business. That way those people, who are all involved in small business, do not have to pay increased tax in the circumstances, if they can allow their partner to make an asset for general use in the partnership to access the small business tax concession via a small business entity test. That is more appropriate and it lines up with the tax law in a more effective and efficient way. The current law means they have to claim the concession in a different manner, and that should not be the case.

The third schedule in relation to this matter, I think has some significant benefits. One of the things about being a lawyer is that you are always amused and bewildered by legislation that has unintended consequences. It does not matter which side of politics is in power, from time to time legislation is drafted that confuses people. It happens at a state level, a territory level and a federal level. There are some highly technical interpretations of law. You can measure the Income Tax Assessment Act by weight as opposed to any other measure. You could almost use it as a dumbbell, it is so large. It is extraordinary that in this country we have ended up with an Income Tax Assessment Act that means you have to have a doctorate of tax law to be able to interpret sections of it. It is one of the most confusing parts of law, not just for lawyers but also for accountants and for small businesses. It is possible to interpret our legislation in such a way that a right or entitlement to receiving a tax offset is considered a capital gains tax asset for tax purposes. That is simply ridiculous. Tax offsets are intended to help, not hinder, small business. Tax offsets are meant to be tax benefits for eligible taxpayers. They are not meant to potentially incur tax consequences of an adverse nature to taxpayers. The amendment here provides a general exemption from capital gains tax for capital gains or capital losses arising from a right or entitlement to a tax offset deduction or similar benefit. So it has some benefit as well.

Schedule 4 talks about amendments providing financial assistance. (Quorum formed) I am nearly finished. The member for Herbert could have waited a few more minutes. I know that water is an issue in dealing with climate change. It is something the coalition really do not want to deal with too often. They prefer procrastination, idleness and inactivity in dealing with issues such as the CPRS because it is all too hard. The opposition are divided between the sceptics and the moderates, those who want to take action and those who want to simply do nothing. They just do not want to hear about it. Schedule 4 of this legislation deals with the National Urban Water and Desalination Plan. It relates to offsets and it makes significant improvements. The member for Wakefield has gone through these amendments in detail, but I just comment briefly that it forms part of our policy called Water for the Future and it will support activities, proposals and initiatives which will improve investment and increase the diversity of our water supply options—and that is important—to encourage industry and to encourage our community to save water and to use it more efficiently.

In Queensland, and particularly in South-East Queensland, we had dam levels below 20 per cent for a long time. Thankfully, Mother Nature has looked upon us with kindness in the last few months and our dam levels in South-East Queensland are collectively up to about 70 per cent. That has good consequences for industry, small business and farming communities. I still think it is necessary in the circumstances for us to be vigilant and to have a national plan not just for local government and urban development but also for water management and usage. The use of water has become very elastic in South-East Queensland. People are used to meeting the challenge every day of the adequate and appropriate consumption of water—of saving it, of engaging in grey water initiatives and of simply teaching their children how precious water is. So schedule 4 is a good and appropriate initiative in all the circumstances.

Of course, we allow many organisations to obtain deductibility for charitable purposes and for income tax deductions. Certain gifts are given by people who are motivated by a more communitarian response—they want to help their fellow citizens, whether it is in the area of charity directed at health or the relief of poverty—and we enable a lot of organisations to offer the service of income tax deductions for gifts made to them. So getting deductible gift recipient status is very important and schedule 5 opens it up to a number of different organisations.

Schedule 6 is very interesting in that it allows, for example, a more appropriate use of reporting, forms and business accounting as well as electronic interactions between business and government. Schedule 6 allows the Registrar of the Australian Business Register to act as a multi-agency registration authority. It is a very good initiative. It will enable business to operate in a more effective way. It will simplify the relationship between government and business, reducing costs, duplication and the frustration that business often finds in dealing with government.

I will not go through the greenhouse challenge initiatives here. The member for Wakefield has gone through those in detail. As I have said, schedule 8 deals with tax exemptions for certain grants to businesses affected by the bushfires. It is important that we give our businesses confidence. How we deal with the taxation system, and how it affects small business, affects many millions of people in Australia. We are going through the worst global recession in 75 years. In the circumstances, it is a good thing—and the right thing—to act in a way which supports jobs and cushions the impact of the recession on our economy and on our electors. If we can change the taxation laws of this country to achieve that measure—to support jobs and small business to ensure that we as a country have a strong and prosperous future—that is the right thing to do by our country and by the individuals who are employed by small business. I commend the legislation to the House.